Pricing Strategy

Market Structures and Pricing Strategies
Kiona Thomas
American Public University
Econ600

Abstract
The article analyzes the four main market structures, which are perfect competition, monopolistic competition, oligopoly and monopoly. It provides a detail description of the market, as well as explains the pricing strategy a firm would pursue in that particular market. The article also concludes with a real world example of Visa pricing strategy by examining it oligopoly market structure. Visa has few competitors; however, it must continuously monitor its competitor’s actions in order to remain competitive in today’s market. While, Visa is currently out performing it competitors, they are constantly trying to expand their market.
Keywords: market structure, pricing strategy, Potomac Edison

Market Structures and Pricing Strategies
Introduction
Economist can divide today’s market into four different market structures, which are perfect competition, monopolistic competition, oligopoly and pure monopoly. The market structure will help the firm select their pricing strategy. Each market structure has a different pricing strategy the organization can use to achieve profit maximization.
Perfect Competition
What is perfect competition? Perfect competition is sometimes referred to as pure competition (Officer, 1966). According to Robinson (1934), perfect competition is “a state of affairs in which the demand for the output of an individual seller is perfectly elastic” (p. 104). In order for perfect competition to exist four conditions must be true, which are as follow: 1. Multiple firms 2. No entrants barrier exist 3. Same standardized product 4. Price takers (Samuelson & Marks, 2012).
The four characteristics are ideal for perfect competition; however, some competitive markets may not meet all the specifications (Samuelson & Marks,…...

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...PRICING METHODS
1. MARKUP PRICING: - This method is to add a standard markup to the product’s cost. Construction companies submit job bids by estimating the total project cost and adding a standard markup for profit. Lawyers and accountants typically price by adding a standard markup on their time and cost.
Unit cost = Variable cost + Fixed Cost
Unit sales
Markup price = Unit cost
1 – Desired return on sales
2. TARGET- RETURNS PRICING: - In target return pricing, the firm determines the price that would yield its target rate of Return On Investment (ROI). General Motors has priced its automobiles to achieve a 15% to 20% ROI.
Target – returns price = Unit Cost + Desired return * Invested Capital
Unit Sales
3. PERCEIVED- VALUE PRICING: - An increasing number of companies now base their price on the customer’s perceived value. Perceived value is made up of several elements, such as the buyer’s image of the product performance, the channel deliverables, and the warranty, quality, customer support, and softer attributes such as the supplier’s reputation, trustworthiness, and esteem. Companies must deliver the value promised by their value proposition, and the customer must perceive this value. The key to perceived value pricing is to deliver more value than the competitors and to demonstrate this to......

...MKTG-­‐288-­‐001
Professor
Zhang
From
Print
to
Portal
Pricing
Strategies
in
the
Online
News
Realm
Suzanne
Zwemer
Angela
Xu
Crystal
Pang
Nicolas
Aguirre
Max
von
Weisberg
21
April
2010
1 I.
Introduction
Last
year,
53%
of
adults
(or
71%
of
internet
users)
in
the
United
States
received
their
news
online
than
by
buying
a
newspaper
or
magazine.1
Things
have
changed
quite
dramatically
since
748
AD
(the
first
record
of
a
newspaper
in
Beijing,
China).
From
Johannes
Gutenberg’s
invention
of
the
printing
press
in
1451
to
dwindling
circulation
in
2010,
the
newspaper
industry
has
experienced
both
impressive
growth
and
steady
decline.
In
the
1700s,
market
factors
such
as
rising
literacy
and
the
development
of
postal
services
galvanized
the
distribution
of
newspapers.
Growth
continued
in
the
1800s
with
the
rise
of
the
middle
class.
In...

...• Before we take up on any strategy we should look at the bigger picture and see how our product fits in the market. What value or need is it satisfying.
• Eliminate the segments that will not buy the product
o Match the value drivers of the customer against the product - exclude price --> by doing this we are looking for customer who can potentially buy the product. This is called the broad horizontal segment.
o Divide the horizontal segment into different vertical segments according to their price sensitivities.
o Set a price by targeting segments in order to maximize profits
• Value of the product to the customer
 EVC = reference price + value (product - reference)
• This is the highest price that a company can charge for the product
 How do I find refernce product?
• Look for an alternative that a customer is currently using. Look for a similar product that is in close competition with the product eg land rover and jeep
• Look for a product that serves the same function as the target product eg calculators and slide rules
• None of the above
• Assumption - the competitor will not change the price if our product enters the market
• WTP of the customer
 This is between the variable cost and EVC
 Sometimes consumers are not aware of the added value so if a price is too close to EVC customer will not buy it. We need to educate customer s about the values
 In case of high switching costs the product should be priced low to offset the switching costs
......

...Pricing Strategy for Wellness, Inc.Prepared by Marlowe K. Blackwell |
How can Wellness, Inc.best use Price Discrimination to increase revenue? |
This document will identify, compare and analyze various pricing models currently used by competitors and recommend a pricing strategy for Wellness, Inc. to increase revenue and maximize profit. |
8/12/2013
8/12/2013
Outline
1. Introduction
2. Background of Wellness, Inc.
a. Type of business
b. Market segment
3. Background of Industry
4. Wellness, Inc.’s current pricing model
5. Comparison Competitor pricing models:
c. Massage Envy- two part tariff
d. Rubs – two part tariff
e. Massage Goat – third degree
f. Massage Retreats–second degree
6. Recommended Pricing Strategy for Wellness, Inc.
7. Next Steps
Introduction
Wellness, Inc., Inc., WELLNESS, INC., is a massage and wellness studio with one treatment room located within Salon 101. WELLNESS, INC. is differentiated from other spas and massage therapist in the Milton and Pensacola area based on being the only Ayurvedic Massage therapist in the area and offering natural and organic products. Salon 101 is a busy hair salon with six hair stylist offering hair care and one dedicated nail technician and two hair stylists that offer nail services. Salon 101 client segment is primarily female clients with incomes of $60,000 or less with approximately 20% with income above this bracket.
WELLNESS,...

...Pricing Strategy:
Ecaterina Curova
Jason Geesey
LCC International University
November 13th, 2013
Pricing Strategy:
Pricing is the moment of truth; it is when all of the company’s marketing and financing strategies really meet the final decision point with its customers (Kotler & Armstrong, 2012, p.314-315). “One of the key aspects of getting the financial control of the business is developing a pricing strategy for its particular market so the product or service can be sold properly” (“Developing a Pricing Strategy for Your Business,” 2010). If a company has a good pricing strategy for the financial basis and a good marketing strategy than it is very easy to sell the product (“Developing a Pricing Strategy for Your Business,” 2010).
There are two ways of pricing the product or service in the market: value-based pricing and cost-based pricing. Value-based pricing is looking on how customers value the product and is basing the price on that (Kotler & Armstrong, 2012, p.315). If a medical engineer has a pill that costs him a dollar to make, however, it can cure cancer, customers are going to pay him a lot more money than one dollar for it. Businesses look at what value people put on their product and price it accordingly. On other side there is a cost-based pricing which looks at how much money a company has to spend to make their product and bases its cost on that (Kotler & Armstrong, 2012, p.319).
There are a lot of different pricing strategies that are......

...Table of Contents
Introduction..............………………..………………………………...2
Pricing Strategy.............................…….………..…………………… 2
Non-price Barriers to Entry...……………..…...…………….……… 3
Ideas for Product Differentiation...……..………..……….………… 3
Markets………………….……………..................................………… 4
Profit Maximization.............................................................................5
Loss Minimization...............................................................................6
Conclusion..........................................................................................7
Introduction
Larson Inc. must be able to adapt to the economic changes in the market to remain competitive. The needs of consumers will constantly change as well as economic conditions for the countries in which they operate in. The company must examine their pricing strategy, non-price barriers, product differentiation and costs to remain a successful international company. To do this, the management must take an active role in the decision making for the company. First, the company must be able to identify the market in which they are currently operating in. This will help Larson Inc. determine how to change their pricing strategies to meet their organizational goals. The different departments can work as a team to make recommendations to the management on their non-price barriers to entry and the product differentiation based on the current market. All of these factors......

...Pricing Strategy
Establishing an effective pricing strategy is crucial for the success of a business when launching a product or service. “Pricng decisions affect both the number of sales a firm makes and how much money it earns.” (University of Phoenix, 2011, para. ) Indeed, one of the most important issues facing any business is determining how much to charge for a product or service. The market for tablets and other mobile devices has a wide range of options to choose from. Prices range from as low as $59.99 for a smaller Proscan tablet at sold at Wal-Mart to Apple’s iPad starting at $349.00 and go higher depending on how much memory you’d like to have included. Amazons Kindle Fire HD offers a quality product at a competitive price point considering the quality of materials such as HD camera and HD display, for around $299.00 with smaller size Kindle Fires going for $160.00
An effective pricing strategy when launching the Kindle Fire Hd would be initiating a penetration pricing policy that covers a wider demographic. Apple’s iPad appeals mainly to the elite market. Amazon doesn’t have a discount plan to offer but does have additional incentives to set itself apart from competitors. The convenience of the Amazon store means purchases and additional features and content are readily available to add to the device. Amazon Prime membership also adds to the experience offering free content available to be viewed at no additional cost. Additional perks such credits that can......

...Market Structures and Pricing Strategies
Kiona Thomas
American Public University
Econ600
Abstract
The article analyzes the four main market structures, which are perfect competition, monopolistic competition, oligopoly and monopoly. It provides a detail description of the market, as well as explains the pricing strategy a firm would pursue in that particular market. The article also concludes with a real world example of Visa pricing strategy by examining it oligopoly market structure. Visa has few competitors; however, it must continuously monitor its competitor’s actions in order to remain competitive in today’s market. While, Visa is currently out performing it competitors, they are constantly trying to expand their market.
Keywords: market structure, pricing strategy, Potomac Edison
Market Structures and Pricing Strategies
Introduction
Economist can divide today’s market into four different market structures, which are perfect competition, monopolistic competition, oligopoly and pure monopoly. The market structure will help the firm select their pricing strategy. Each market structure has a different pricing strategy the organization can use to achieve profit maximization.
Perfect Competition
What is perfect competition? Perfect competition is sometimes referred to as pure competition (Officer, 1966). According to Robinson (1934), perfect competition is “a state of affairs in which the demand for the output of an individual seller is perfectly......

...average citizen, which is to mean that prices will be set in a way that they are affordable to that target group. The prices in this kind of restaurant are always medium and this restaurant is no exception. I have adopted a cost-plus pricing strategy to cater for all the dishes to be included in the menu which I found to be the best and one I will be guaranteed of profits (Smith, 2012).
This pricing policy is the best because before coming up with the final price for a unit of output, it takes into account various overhead costs such as the rent, wages for the staff and the power used in the rooms. The strategy also considers the profit margins which ensures the restaurant is kept in operation (Smith, 2012). The percentage of the cost and the margins will be combined in order to give a comprehensive percentage that will be used to determine the price of every food item to be sold. This policy also is beneficial to customers because it ensures that they are not exploited and that the business remains competitive in the market.
The value communication strategy to be adopted in this restaurant is one that will communicate to the customer credibly in monetary terms, the extra factor that differentiates our dishes from that of the competitors. The strategy to be adopted will incorporate various business promotional tools such as advertising, direct marketing, sales promotions, personal selling and public relations (Hill, 2013). The above approaches will ensure that a wide......

...Running Head: LONG-TERM INVESTMENT DECISIONS 2
Introduction
A low calorie foodstuff or a healthy option of food is a fresh concept which has gained a lot of
interest in the modern times. In the previous project we had discussed the background and the
introduction of the corporation which wants to cater to this division. This paper will talk about
the long term capital budgeting decisions that such a corporation desires to make.
Pricing Strategy
The Company aims to keep the prices of its products as inelastic as possible. This means that the
pricing strategy should have no impact on the way the consumers perceive and buy such
products (Definition of Inelastic, (n.d.)). Generally we see such demand only in situations in
which the good or services are indispensable and the consumers cannot do without those. But
this is not the case for microwavable food products. The demand function for low calorie
microwavable food largely depends on the price of the merchandise, its relative (substitute)
product, advertisement overheads and last but not the least on the income of the consumer.
From the demand function and the elasticity considered, it is established that the market for the
low calorie microwavable foodstuff fit in to a market of monopolistically competitive type. A
monopolistic competitive is distinguished by a reasonable number of buyers and sellers. As a
result people can change to another brand if a specific brand charges a soaring price.......

...Pricing Strategies and Marketing Channels
Introduction
Pricing Strategies and Marketing Channels are essential to the success of the health care system today. The role of pricing is to give the product or service its image. A health care facility that has quality products and services has to make sure that they also have a good pricing mix to attract new customers and to appeal to its customers loyalty. In today's society, customers are beginning to be sensitive to pricing of products and services because of the economic change. With the rise in prices, loss of employment and the health insurances issues on the minds of citizens in the United States, many are now searching for the best service or product that they can obtain for less. This paper will display the importance of pricing strategies and the use of intermediaries in the health care system. It. will explore the concepts of pricing strategies and marketing channels and their relevance to the health care system.
Explain at least four of the seven steps for setting an initial price for a product or service,
In the past, many physicians, customers and health care professionals thought it to be unethical and unprofessional to market the sales of health care products and services (Kreidler, 2008). The following will addresses how the health care facility can be successful in marketing its products and services. :These next four steps will show the importance of price setting.
Selecting the Pricing Objective...

...EXECUTIVE SUMMARY
As we already are aware the Pricing strategy is one of the Marketing Mix’s “Four Ps” along with the Product, Promotion and Place strategy. In this article is described more specifically how different pricing policies are viewed from the customers as well as the considerations lying behind of a low price. Moreover, the article describes the association between each strategy with the pricing strategy and how the combination influence different outcomes.
To conclude, the article along with the illustration of those strategies makes a linkage between them and the Total Customer Value.
THE LEARNING LESSONS FROM THIS ARTICLE
1) Organizations should pay equal attention to both Four” P’s” strategies and do not focus solely in the pricing strategy, since all these components are of great value as long as the firm knows how to take advantage properly.
However, small/medium sized businesses mostly of the time relies on the pricing strategy as they think that price is the most significant point of reference of how customers and competitors view them in the market.
2) Firms should find such equilibrium in their pricing strategy, nor too high or nor too low. This price should reflect the value proposition of the firm, which should be consistent, and, therefore support its business model.
If a company places the price too high, automatically makes the product unaffordable for the majority of people, therefore luck potential for huge growth. On the other......

...Pricing Strategy
How much should you charge for your product or service?
One of the most difficult, yet important, issues you must decide as an entrepreneur is how much to charge for your product or service. While there is no one single right way to determine your pricing strategy, fortunately there are some guidelines that will help you with your decision.
Before we get to the actual pricing models, here are some of the factors that you need to consider:
• Positioning - How are you positioning your product in the market? Is pricing going to be a key part of that positioning? If you're running a discount store, you're always going to be trying to keep your prices as low as possible (or at least lower than your competitors). On the other hand, if you're positioning your product as an exclusive luxury product, a price that's too low may actually hurt your image. The pricing has to be consistent with the positioning. People really do hold strongly to the idea that you get what you pay for.
• Demand Curve - How will your pricing affect demand? You're going to have to do some basic market research to find this out, even if it's informal. Get 10 people to answer a simple questionnaire, asking them, "Would you buy this product/service at X price? Y price? Z price?" For a larger venture, you'll want to do something more formal, of course -- perhaps hire a market research firm. But even a sole practitioner can chart a basic curve that says that at X price, X' percentage will buy,...

...Appropriate Price Strategy
Price strategy is an essential and most vital element that is involved in the marketing process. Pricing a product to low would affect the bottom line negatively. On the other hand if the price of a good or service is too high, then nobody will purchase them. The key is to research and compare all available pricing strategies and choose which the best one for a particular situation. Prices have always been the center of human interaction ever since traders have been in existence. It should come to no surprise that all companies in different industries spend countless time figuring out how to price their products and services competitively. Examining factors that may impact the development of our marketing strategy may require an assessment of a variety of factors in which includes a market analysis as well as an analysis of the Eaton’s position of the brand within the market. Being able to determine the appropriate marketing mix for the Eaton tablet will define how the product will be viewed by others that are looking in. The marketing mix will be consisted of a definition to what exactly the Eaton tablet does and how it will help optimize employee capabilities at the same time lessen the consumption of paper and employee communications. Determining the appropriate marketing mix for the Eaton tablet would consist of defining exactly what the tablet does and how it can be incorporated to every business out there to get the same output. Developing a...

...Apple. Are the questions around his new pricing strategy for Penney premature?
JC Penney is trying to find a customer segment that is not entirely focused on price and deliver a different experience to them. But the problem is that JC Penney is currently a “me too” retailer, with nothing unique to offer. They are selling to a customer segment that is trained to look for the cheapest deal and their products don’t possess the differentiation to take consumer’s focus off its price. When selling a relatively undifferentiated product, it is hard to convince customers to pay more than what a lower priced competitor might offer. Differentiation is a key to avoiding steep discounts, and for JCP it seems pre-mature to offer lower prices when products are not differentiated. That differentiation can come from products or from the service in their stores. The “Town Square” concept is aimed at achieving just this – create an experience that no other retailer provides. But that’s still a few years out. CEO, Ron Johnson is a former Apple executive who played a big role in the success of the Apple Stores. Applying the same principles will not work here as JCP neither has the product differentiation nor the brand loyalty of Apple’s customers.
Big box retailers have always used steep discounts to get people in the door. They use the original list price as a reference price to help create a perception that buyers are getting value. With this new pricing approach, JC Penney is not creating......